Based on the underlying economy in Norway and the forecast for Norges bank, the index weighted Krone should be a lot stronger than current levels. But stronger macro from US and falling oil price has reduced the demand for NOK , especially against US dollar (USD). However, we feel that current risk/reward is tilted on the downside based on following factors.
Upcoming week, we following events from Norway.
- Budget statement (Wed), should be more oil spending as this sectors drags down the overall activity in Norway. A higher spending means more buying of Norwegian Krone for Norges Bank.
- Core ( Fri ), should surprise on the upside and above Norges Banks forecast of 2.5% as weaker NOK should support a higher (imported) a long with higher food prices and airfares.
From a technical point of view:
- from 2009 highs around 6.50+
- Overshoot from current trendchannel on the upside. In most cases we see a powerful reverse after such events
- (weekly) is above 70. Last two times this happend, we did set a meaningfull top
Resistance: 6.60 and 6.80
Support: 6.25/6.20 and 5.95/6.00
Again, we have last two weeks been wrong regarding a possible top in USDNOK and we are trying to catch a falling knife. However, we feel risk/reward is on our side based on fundamental factors. But the market is for now telling us that the trend is clearly up.